Should you subscribe to Anupam Rasayan India IPO? Here’s what analysts have to say

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The Rs 760-crore initial public offerings (IPO) by specialty chemical firm Anupam Rasayan is set to hit the primary market on March 12. The company has fixed a price band of Rs 553-555 a share for its initial share-sale.

The three-day public issue will close on March 16. The IPO is an entirely fresh issuance of equity shares and proceeds of the issue would be mainly used to pay the debt. The Surat-based company has reserved about 2.20 lakh shares for employees. Half of the issue is reserved for qualified institutional buyers, 35% for retail investors and 15% for non-institutional bidders.

Anupam Rasayan commenced operations in 1984 with conventional products and now it makes speciality chemicals that involve multi-step synthesis and complex chemistries. It has six multi-purpose manufacturing facilities based in Gujarat with a combined aggregate installed capacity of around 23,396 metric tonnes, of which 6,726 metric tonnes was added in March 2020.

The company mainly caters to the agrochemical, personal care and pharmaceutical sectors, which accounted for over 95 per cent of its revenues in 2019-20. Its clients include Syngenta Asia Pacific, Sumitomo Chemical Company and UPL Limited.

Most brokerages have advised subscribing to the issue on the company’s strong long-term relationship with its customers and also the strategic manufacturing location. Here’s what they have to say:

Marwadi Shares and Finance: Subscribe Considering trailing-twelve month EPS of Rs 5.83 on a post issue basis, the company is going to list at a P/E of 95.16x with the market cap of Rs 5544.5 crore. The issue is aggressively priced compared to its peers; Navin Fluorine is trading at a P/E of 29.6x and PI Industries at 51.4x. Marwadi Shares and Finance recommends to “Subscribe” this IPO based on its past track record, strong long-term relationship with its customers and also the strategic manufacturing location along with huge Capex in the last three fiscals.

Anand Rathi Shares and Stock Brokers: Subscribe

The company has a strong financial position and has been generating positive cash flow. Anand Rathi Shares and Stock Brokers is positive on the company for long-term prospects. Hence, it recommends a “Subscribe” rating to this IPO.

Primary market expert Dilip Davda: Subscribe for long term

Anupam Rasayan is in the custom synthesis and speciality chemical manufacturing business. The company’s life science speciality chemical has a major share in top lines. The company’s capex of Rs 800 crore in the last three fiscals has started bearing fruits. The issue is aggressively priced based on comparison with listed peers. Investors looking for long term bet may consider investing in this IPO.